Tag Archive | "NADA Used Car Guide"

NADA: Supply, Incentives Driving Down Retention Rates

MCLEAN, Va. — Through September, retention rates for most model-year 2013 vehicles are down across the board compared to last year, according to NADA Used Car Guide. Larry Dixon, the firm’s director of market intelligence, said increased supply and incentives are the reasons.

“We estimate that the supply of used vehicles up to five years old will jump by 12% this year. This is the biggest increase in more than a decade,” Dixon said. “As for incentives, with new-vehicle sales growth leveling off, manufacturers are dialing up incentives to preserve market share. Per J.D. Power, incentives were up 9% through August to an average of $3,436 per unit.”

Only mid-size vans, luxury large utility, sports cars and mid-size pickups retained their average value better this year compared to 2015, according to the report. And, out of those four segments, mid-size pickups held their value the most — holding an average of 67.2% of their value after three years.

Segment Retention Rates

  1. Mid-size Pickup: 67.2%
  2. Half-ton Pickup: 56.5%
  3. Mid-Size Utility: 53.7%
  4. Large Utility: 53.1%
  5. Lux Large Utility: 52%
  6. Sports Car: 51.2%
  7. Compact Utility: 50.7%
  8. Mid-Size Vans: 50.4%
  9. Lux. Sports: 50.2%
  10. Lux. Compact Util.: 50.1%
  11. Lux. Mid-Size Util.: 48.2%
  12. Compact Car: 46.5%
  13. Lux. Subcompact: 45.1%
  14. Lux. Compact: 43.7%
  15. Mid-Size Car: 43.6%
  16. Lux. Large Car: 42.4%
  17. Large Car: 42.2%
  18. Lux. Mid-size Car: 41.2%
  19. Subcompact Car: 37.5%

“Their versatility can’t be matched, and the road manners and fuel efficiency of today’s utility and pickup truck are significantly better than in the past. Availability — or the relative lack thereof — is also helping,” Dixon said in a statement issued to F&I and Showroom.

He added that although the supply of large pickups at auction is up about 28% compared to the year prior, it is still well below the pre-recession highs. Additionally, the relatively low price of gas, and the forecast of cheap gas to come is adding to the appeal of pickups.

However, while low gas prices are acting as a boon for pickups and utilities, it’s acting as a bane for subcompacts. The NADA Used Car Guide found that the subcompact segment retained its value the least out of all segments — 37.5% of its value after three years — and also realized the worst retention rate decline out of all segments — vehicles in the category dropping 7.2% in value compared to the year before.

Dixon said that the main reason for the decline in subcompact car retention is similar to the reason the industry as a whole is seeing declines in value retention: increased supply.

“It’s estimated that subcompact volume of vehicles up to five years old will grow by 20% [or more] this year, more than the vast majority of other segments,” Dixon said. “We’ve seen auction volume for the segment grow at a similar rate so far this year, 22%.”

Retention Rate Change From Year to Year

  1. Subcompact Car: -7.2%
  2. Large Car: -4%
  3. Compact Util.: -3.4%
  4. Lux. Subcompact: -3.2%
  5. Compact Car: -2.6%
  6. Lux. Compact: -2.5%
  7. Lux. Mid-size Util.: -2.2%
  8. Lux. Mid-size Car: -1.9%
  9. Lux. Sports: -1.9%
  10. Mid-Size Car: -1.6%
  11. Large Util.: -1.4%
  12. Half-Ton Pickup: -1.2%
  13. Lux. Compact Util.: -0.9%
  14. Lux. Large Car: -0.4%
  15. Mid-Size Util.: -0.3%
  16. Mid-Size Vans: +0.3%
  17. Lux. Large Util.: +1.5%
  18. Sports Car: +1.6%
  19. Mid-Size Pickup: +4.7%

While the average retention rates for the other car segments — compact, mid-size, large, luxury subcompact, luxury compact, luxury mid-size, and luxury large — were all below the larger utilities and pickups, their rates were noticeably better than subcompacts. At the low end were three-year-old luxury mid-size cars with a retention rate of 41.2%. At the high end were compact cars with a retention rate of 46.5% after three years.

Dixon also noted that while the subcompact segment is struggling, the luxury subcompact is holding its value much better than its non-luxury counterpart. In fact, the luxury subcompact segment is holding its value better than every other luxury car segment — the one exception being luxury sports.

The reason being is that luxury subcompacts are a less mature segment with less competition, Dixon noted. The segment, he added, also facilitates entry into the luxury sector because of the segment’s relative affordability vs. larger luxury vehicles.

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July’s 2.3% Drop in Wholesale Prices Ties June Record, NADAUCG Reports

MCLEAN, Va. — Wholesale prices for vehicles up to eight years in age fell 2.3% in July, tying June for the biggest drop recorded so far in 2016, according to the NADA Used Car Guide. As a result, the firm lowered its seasonally adjusted used vehicle price index 1.1% to 118.9 .

The largest decline in wholesale price was recorded in the subcompact car segment, which saw prices drop 3.9% compared to June’s figures. Mid-size and compact cars followed a similar trend, with each segment recording an average price decline of 2.9% compared to the prior month. Prices for large cars fell 2.5%, higher than the industry average but better than the 2.8% decline the segment experienced last year.

The large pickup and large utility segments continued to show strength, with prices for each segment falling 0.5% and 0.3%, respectively, compared to the prior month. While other large vehicle segments experienced slightly higher depreciation, the majority of the declines were still under the industry average.

Mid-size pickup prices fell 1.4%, compact utility prices dropped 1.7%, mid-size utility prices dipped by 1.8%, and vans dropped 2.7%.

According to the NADA, the luxury segment was a mixed bag in July. Small luxury vehicles experienced greater losses, while mid-size and large luxury vehicles fared slightly better. The biggest decline in the segment came from luxury compact utility prices, which fell 3.1% from the prior month. Compact car prices fell 2.7%, while luxury mid-size cars and luxury large car prices fell by 2.1% and 1.8%, respectively.

Year to date, used-vehicle prices were 12.5% lower than they were at the end of 2015. Last year, depreciation reached a lesser 9.6% over the same period, according to the NADA.

Compared to all of 2015, subcompact prices have fallen 19.9% year to date. Compact car prices have fallen 16.2%, and mid-size and large car prices have fallen 14% to 14.4%. Year to date, large pickup prices are down 6.8%, while large utility prices are down 5.7%. Mid-size pickups are down 6.3% compared to full-year 2015.

The only segment to experience an improvement in depreciation relative to last year was the large utility segment, which saw prices fall 5.7% through July. For the same period last year, wholesale prices fell 7.1%, the NADA Used Car Guide noted.

Sales volume at auction was also on the decline during July. However, the firm noted, the decline is typical for the time of year. July’s decline marked the fourth monthyl decline in a row. On a year-to-date basis, however, volume is up 6%.

Looking forward, depreciation is expected to accelerate as the market enters what is typically the softest part of the year, according to the NADA. In next month’s report, the NADA Used Car Guide expects used-vehicle prices to fall even more than they did in July. August’s used-vehicle prices are expected to fall by 2.5% to 3% compared to July’s figures. Subcompact car prices are expected to drop by about 3% on a monthly basis, while compact, mid-size and large car prices are expected to fall 2.7%.

Compact utility and mid-size utility prices are expected to decline 2.3%, while mid-size van prices are expected to fall 2.7%. Large pickup and utility pricing are expected to suffer the softest decline at 1.8%, while luxury segment losses are expected to average about 2.5%, according to the firm. In September and October, prices are expected to fall around 3.2% to 3.7% per month.

NADA Used Car Guide’s full-year forecast for 2016 has prices down by an average of less than 5% on an index-basis from 2015.

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J.D. Power to Acquire NADA Used Car Guide

WESTLAKE VILLAGE, Calif. — J.D. Power and the National Automobile Dealers Association (NADA) have announced an agreement under which J.D. Power will acquire NADA’s Used Car Guide business, a well-known source of used-vehicle values. The transaction is expected to close early in the third quarter of 2015 and is subject to Hart–Scott–Rodino Act review.

Established by NADA in 1933, NADA Used Car Guide is a provider of U.S. retail, loan, trade-in and auction used-vehicle values, and is widely recognized in the industry as the authority for accurate and comprehensive used-vehicle valuation information. The company will remain based in the McLean, Va., vicinity where it serves more than 100,000 subscribing clients, including retailers, financial institutions, insurers and software providers.

“This deal is a perfect fit for dealers and NADA Used Car Guide customers. Under terms of the deal, NADA members will continue to receive a subscription to the Guide as a membership benefit,” said Peter Welch, president of NADA. “NADA and J.D. Power will continue to build upon our longstanding alliance by sharing data and insights, and bringing together retailers and leaders from the automakers, suppliers and the media at co-hosted conferences and events, offering thought leadership and solutions directly benefiting the retailer network and overall automotive industry.”

J.D. Power is a global marketing information services company known for using the voice of the customer to create reviews and ratings which measure the shopping, purchase and ownership experience across a wide range of brands and products. The Power Information Network (PIN) from J.D. Power provides real-time automotive information and decision-support tools based on the collection of daily new- and used-vehicle retail transactions.

“We are thrilled to add the NADA Used Car Guide and its vehicle valuation capabilities to J.D. Power,” said Finbarr O’Neill, president of J.D. Power. “NADA Used Car Guide analytical solutions will perfectly complement PIN’s expertise in new- and used- vehicle retail and pricing services, and we will gain an impressive array of integrated vehicle valuation solutions. The Guide’s high integrity and unbiased approach to used-vehicle values, analytics and insights fits perfectly with J.D. Power’s reputation as a trusted advisor to the automotive industry.”

The agreement brings together PIN, which combines advanced analytics of new- and used-vehicle retail sales and pricing data, with the complementary and extensive knowledge, expertise and market presence of the NADA Used Car Guide, thereby expanding J.D. Power’s analytical and modeling capabilities into new product offerings, deepening its presence in auto finance and auto insurance, and enriching retail solutions, officials said.

The NADA Used Car Guide name will be used by J.D. Power for a period of time before transitioning to the J.D. Power brand.

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IHS Automotive, NADA Used Car Guide Continue 30-Year Relationship

SOUTHFIELD, Mich. — IHS Inc. has renewed its long-standing relationship with the NADA Used Car Guide, a provider of vehicle valuation products, services and information to businesses throughout the United States and worldwide.

“With the integration of our complete vehicle census into NADA products and services, IHS is helping to create additional value for dealers, lenders and others in the automotive market with a thorough set of vehicle values,” said Mark Sandora, vice president, North American sales at IHS Automotive. “We are excited to expand our relationship with the NADA and look forward to working with the NADA team in developing additional solutions for the industry.”

IHS, which acquired R. L. Polk & Co. last year, leverages Polk’s comprehensive set of vehicle details, including make, model and series data for vehicles registered throughout the United States and Canada.

“IHS Automotive data is part of the foundation that goes into NADA’s VIN decoding process,” said Mike Stanton, COO and vice president at NADA Used Car Guide. “This enables us to provide the industry with our most comprehensive decoder and continue to produce industry-leading products and services.”

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Average Incentives Rise, Domestics Curb Spending

McClean, Va. — Despite incentive spending rising year over year in March for the 14th consecutive month, incentive growth was the lowest since September 2013, the NADA Used Car Guide reported.

According to Autodata, the industry average for incentives rose to $2,725 per unit, up 5.9% from the previous year. And much of that increase was directed at passenger cars, with spending for that segment increasing 18%. On the other end were light trucks, which realized a 4.3% drop in incentive spending, according to the NADA Used Car Guide’s monthly report. The firm also spotted another trend from last month.

“While Asian and European brands’ spending jumped up by 14% and 13% respectively, the Detroit Three collectively spent 0.2% less than last March, but the cutbacks would have appeared more significant had Ford Motor Co. not driven its incentives up by 14%,” the firm’s report stated.

The NADA Used Car Guide also noted that General Motors did not increase incentives in March as expected. “With General Motors struggling to improve its sales results for much of 2014 thus far, speculation grew over whether the automaker would open up its pockets to boost deliveries or not,” read the report. “However, GM exhibited restraint and achieved 4.1% sales growth in spite of cutting incentives on both cars and trucks for an overall 8% decline.”

According to the report, Buick (up 18%) and Cadillac (up 8%) may have spent more year over year, but volume brands Chevrolet and GMC pulled incentives back by a respective 13% and 11%. The increased spending by the Ford (up 12%) and Lincoln (up 19%), however, did not result in a significant sales increase. Accord to the report, the two brands realized a 3.1% sales gain.

Fiat’s Chrysler also reduced incentive spending by 3.5%, although the only brand to exhibit a cutback was Jeep, which spent 11% less than a year ago. However, the brand successfully increased deliveries by 47%.

Toyota realized a only modest 4.9% increase after increasing incentives for both Toyota (up 4.2%) and Lexus (up 34%). Sales for American Motor Co. were actually down 2% despite spending 46% more on its Honda brand. Nissan North America’s incentives were down for both its brands — down 0.3% for Nissan and 13% for Infiniti — yet sales improved by 8.3%.

Additionally, Subaru’s incentives fell to $794 per unit, down 29% from last year, while its sales were up 21%. Mazda also spent 17% less on incentive compared to last year, but the automaker realized a 9% increase in deliveries.

“Meanwhile, Volkswagen’s 2.6% sales decline was worst in the industry even through its spending went up by 24% to reach $2,925 per unit,” the report noted.

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NADA Report: Used Vehicle Prices Will Remain at a High Level in 2014

McLean, Va. – Average wholesale prices of used cars and light trucks up to eight-years-old will decrease by a range of 0.5% to 1% in 2014, according to the NADA Used Car Guide in its latest report, 2014 Used Vehicle Price Forecast. This modest drop will keep levels on par with 2012, and 14% higher than 2010.

“Economic growth is expected to accelerate to its fastest pace since 2005, keeping demand for new and used autos high,” said Jonathan Banks, executive automotive analyst, NADA Used Car Guide. “A strong economy, combined with other positive factors, leads to a more positive outlook for used vehicle prices in 2014.”

Auto loan interest rates for new vehicles were at their lowest level in at least 40 years in 2013, while lender willingness to extend credit was also very high, he added. “We expect credit to have a slightly less positive effect on used prices as they begin to normalize, but the credit environment will still remain very strong,” Banks said.

NADA expects incentives for new vehicles to rise moderately, but the more discrete use of cash incentives and higher new vehicle prices will minimize direct downward pressure on used prices. However, appealing lease and finance promotions combined with an improving economy will help steer more consumers toward new purchases rather than used, he added.

Late-model used vehicles will be more plentiful, but supply will stay well below pre-recession levels, NADA predicts. Last year’s 15.4% rise in manufacturer certified pre-owned vehicle sales, predominantly derived from this age group, indicates there will be a strong appetite for these units, Banks said. These factors will help counter the downward pressure associated with higher supply.

“A decline in the supply of older models along with greater demand for older used vehicles in recent years will keep prices high,” he added.

NADA expects that new market pressure and a higher supply of used vehicles will lead to a more substantial 1% to 2% decrease in prices for one- to five-year-old vehicles, while the tight supply of six- to eight-year-old units will result in prices being flat or rising slightly.

At a segment level, annual changes in price will remain largely influenced by supply levels. Segments with a higher supply of late-model vehicles on both an annual and historical basis will experience the greatest decreases in price, including subcompact, compact and luxury mid-size cars, as well as compact utilities, NADA predicts.

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